President Cyril Ramaphosa on Wednesday threw his weight behind finance minister Tito Mboweni’s contentious economic growth strategy document, putting him on a collision course with his main backers from the Left.
Delivering his opening remarks at the first meeting of the presidential economic advisory council at Tuynhuys in Cape Town, Ramaphosa said if implemented, the reforms will go a long way to restore confidence and credibility. He said the proposed initiatives would provide hope that average economic growth could be lifted.
The president appointed the 18-member council for a three-year term with effect from October 2019. Comprising local and international economic thought leaders, the non-statutory and independent body chaired by the president brings together prominent economists and technical experts drawn from academia, the private sector, labour, communities, think-tanks and other constituencies, to advise him and the government.
“Much work is being done to improve confidence and regain credibility and trust by implementing those reforms that already enjoy support and have been under discussion for some time,” Ramaphosa said.
Some of the controversial ideas contained in the document, which was released in August, include the privatisation of state-owned enterprises (SOEs) that do not serve a developmental purpose, and the sale of some of Eskom’s coal-fired power stations.
The ANC’s alliance partners, the SA Communist Party and trade union federation Cosatu, who were largely responsible for Ramaphosa’s election to head the governing party and the government, are opposed to some of the proposed reforms in the discussion document. They also expressed concern about the lack of consultation and the processes followed ahead of the paper’s release.
Cosatu also disagreed strongly with a number of the policy recommendations, such as exemption for small and medium enterprises (SMEs) from the national minimum wage and the privatisation of Eskom power stations.
The divisions are said to be frustrating efforts to boost SA’s ailing economy.
Several observers have pointed out that SA has arguably some of the best economic policies in the world but fails when it comes to implementing them, which has put off investors and hampered growth and employment creation initiatives.
Growth in the SA economy — mainly driven by the services, manufacturing and mining sectors — has been slow since 2011, when it recorded 3.3%. Since then, it has generally been trending downwards, falling below 2% from 2014.
Ramaphosa said various reforms meant to kick-start the economy have already been implemented.
“Our work towards an effective visa regime for tourism and high-skill immigration is under way. For example, the minister of home affairs has abolished the requirement that children entering SA should present unabridged birth certificates,” Ramaphosa said.
Visa waivers have been extended to visitors from several countries, requirements have been simplified for countries such as China and India, and an e-visa system will be piloted from November. A policy directive on the release of spectrum was issued and regulator Icasa has begun the process to license high-demand spectrum.
The president also emphasised that the Integrated Resource Plan, dealing with SA’s energy strategy and policy, was under discussion at cabinet and will soon be released. The paper, detailing the government’s approach to Eskom, will be tabled in cabinet shortly, said Ramaphosa.
“This is a very important exercise, because it consolidates all the work by Eskom’s board and management, government departments and the various task teams advising government to turn around our electricity entity and to reform energy markets.”
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